5% First Home Loan Deposit Scheme Expands Early: Will It Push Prices Higher?

The much-talked-about home loan deposit scheme is set to roll out sooner than expected, opening the door for more buyers to purchase with just a 5% deposit. But there’s a twist. With the early expansion, some experts warn that buyers may want to move quickly before property prices shift upward.

The Home Guarantee Scheme (HGS) is at the heart of this change. It allows first home buyers to enter the market with only a 5% deposit while avoiding lenders' mortgage insurance (LMI).

Currently, the HGS is only available to a limited pool of buyers who meet strict income caps and property price limits. Places are also capped each year, meaning many miss out.

Originally slated for expansion in 2026, the changes will now take effect from 1 October 2025.

That’s welcome news for anyone saving hard for a deposit. But it could also mean increased competition and higher prices once the new rules take effect.

How the First Home Loan Deposit Scheme Works

With housing affordability stretched, scraping together a 20% deposit can feel impossible. That’s why an Australia first home loan deposit scheme, through the HGS, has become such a lifeline. 

Since its launch in 2020, the scheme has helped more than 230,000 first home buyers use the program to secure a property with just a 5% deposit.

While the HGS doesn’t hand out cash, it delivers savings in another way. By guaranteeing part of your loan, the federal government removes the need for LMI – a cost that can otherwise add tens of thousands of dollars to your home loan.

What’s Changing in the 5% Home Loan Deposit Scheme

Here’s what else is on the way: From 1 October 2025, every first home buyer will be able to apply under the HGS, which is also known as the Australia first home loan deposit scheme.

• The cap on the number of places will be removed.
• Income limits will no longer apply.
• Property price thresholds will be lifted to give access to more housing options.
• The Regional First Home Buyer Guarantee will be rolled into the broader First Home Guarantee.

Housing Minister Clare O’Neil has framed these changes as a way to help Australians buy sooner, with fewer roadblocks.

Why the Australia First Home Loan Deposit Scheme Could Affect Prices

The early start of the first home loan deposit scheme through the HGS could trigger price movements. The Insurance Council of Australia predicts property values could rise by up to 10% in the first year in hotspots popular with first home buyers.

Across the country, prices climb between 3.5% and 6.6%.

The reasoning is simple: boosting demand in a tight housing market usually leads to upward pressure on prices. That’s why some buyers may find it makes sense to act sooner rather than later.

Take the Next Step with Osinski Finance 

No one can say for certain how the property market will respond once the new rules start. What is certain is that owning a home often feels more rewarding than paying rent.

You also don’t have to wait until October. If you meet today’s income and property caps, you may already qualify for the HGS.

 At Osinski Finance, we help first home buyers navigate the home loan deposit scheme, simplifying the process so you can clearly understand your options and move confidently toward owning your first home. 

Alongside helping first home buyers, we also offer expert support with home loans and property investment, giving you the confidence to plan for today while building for the future.

Contact us today to discover if you’re ready to secure your first home loan deposit scheme. You may be closer to owning your first home than you realise.

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